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BlackBerry could cut 5,000 more jobs by end of year, report says

Some market watchers caught by surprise because of the scale of the potential workforce cuts.

The Wall Street Journal reports that BlackBerry plans to slash its workforce by up to 40 per cent likely affecting several thousand employees. The news came the same day the company introduced a new touchscreen phone. (Mario Tama / GETTY IMAGES)

On the day it announced its latest flagship smartphone aimed at spurring a turnaround, BlackBerry faced speculation it is planning thousands of additional jobs cuts by the end of the year.

Citing unnamed sources, the Wall Street Journal on Wednesday said the Waterloo-based smartphone maker will slash 40 per cent of its workforce or roughly 5,000 jobs as it adjusts operations to match its sharply declining share of the global mobile device market.

BlackBerry eliminated 5,000 jobs last year and has laid off several hundred more workers since it reported an $84 million (U.S.) loss in the quarter ended in June. But the scale of the layoffs suggested by the Journal caught some market watchers by surprise.

The company in an email said it would not comment “on rumours and speculation. As previously stated, we are in the second phase of our transformation plan,” the statement said. “Organizational moves will continue to occur to ensure we have the right people in the right roles to drive new opportunities in mobile computing.”

The newspaper said layoffs will affect all departments in stages, likely involving several thousand employees.

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The company said it does not break out its staff by region, but BlackBerry in March reported a global workforce of 12,700.

BlackBerry maintains a manufacturing facility in Waterloo, Ont., but most of its assembly work is contracted offshore.

Peter Misek, a New York based analyst with Jefferies, believes BlackBerry has until the end of the year to split its hardware and software assets into two companies, or its value will deteriorate to effectively nil. He said in an email that the Wall Street Journal report is “likely true” since BlackBerry handset sales in markets including the U.S. are falling well short of expectations.

The mayor of Waterloo, Brenda Halloran, issued a statement saying: “We will wait to see BlackBerry’s announcement . . . Anytime an organization faces a reduction in staff, it impacts the community and my heart goes out to the families involved.”

BlackBerry has undergone a dramatic fall from grace in recent years amid delays in releasing new products and in retooling its business-focused devices to appeal to a broader consumer market.

Its share of U.S. smartphone sales has tumbled from more than 40 per cent less than four years ago to 3 per cent in the last quarter amid competition from Apple devices and smartphones running the Android operating system.

BlackBerry posted a 40 per cent drop in revenue year over year in its latest quarter and has seen a steady decline its global subscriber base from a peak of 80 million. The company’s shares have shed more than $80 billion of their value over the past three and a half years.

BlackBerry, which on Wednesday launched a new touchscreen phone with a five-inch screen, said last month that it was exploring options including selling parts or all of the company. Director Bert Nordberg has said BlackBerry could divest parts of its business to become a smaller player.

Early in July, CEO Thorsten Heins told reporters at the annual shareholders’ meeting that BlackBerry would continue to lower costs through smaller scale job cuts, but said layoffs would not amount to the thousands. BBRY shares rose two cents in after hours Nasdaq trading to $10.42.

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